Diagnos (ADK.V) is in the business of leveraging image recognition technologies for diagnostic purposes. We initiated coverage in January 2017, with a subsequent note on July 2017. February 2018, and July 2018. Here's an update on the issued releases.
July 31 - Provides Update on Business Operations
USA - Sign three year contract with first US client (after pilot) - 600 patients/month with additional camera orders from client.
CHUM: Expect to screen 4,500 patients from August to December of 2018. Diabetic population estimate in Quebec (800.000).
Mexico & Panama - Mexico - open one new clinic otherwise on hold due to elections, Panama, open new clinic.
KSA - Sign first contract with local partner, averaging 1000 patients/month
Pharma - Working with multiple companies such as Novo Nordisk for Hypertension and Retinopathy.
CARDIO - Ongoing clinical trial in the US, Canada, Algeria and Mexico .
In our opinion, the learning curve for any high tech company to be fully able to access the medical market is at least 5 years.
Aug. 24 - Private placement for $0.1M of 1,33M units issued at $0.075. Proceeds to fund marketing and administrative expenses.
Sep. 5 - Partners with Optina Diagnostics - Provide a Web Platform for the Early Detection of Alzheimer Disease for 3 years. Optina will use DIAGNOS Cloud services to upload images generated by Optina’s hyperspectral camera for early detection of Alzheimer.
Sep. 11 - Closing of Private Placement of Common Stocks and Stock Warrants (Aug. 24th) - 1.5M units issued at $0.075 for $0.11M.
Sep. 18 - To Provide Retinal Image Analysis to 20/20NOW. Will use CARA to upload their retinal images and retrieve the results after analysis to detect anomalies caused by diabetic retinopathy in real time. 20/20NOW has a network of of more than 60 customers located across the USA.
Oct. 24 - Announces Private Placement of Common Stocks and Stock Warrants & Shares for Debt. 8M units issued at $0.05 for gross proceeds of up to $0.40M. Corporation will also issue 4.37M shares in payment for a debt of $0.21M related to interests payable on outstanding convertible debentures and convertible notes. The proceeds will be used mainly to fund sales and marketing as well as administrative expenses.
One of the participant is a director of DIAGNOS - 2M shares at 5.5% ownership. Closing of the Private Placement is scheduled for October 30, 2018.
Nov. 1 - Closing of Private Placement. $0.05 per Unit for gross proceeds of $0.5M from Oct 24th ($400,00) - Oversubscribed - Warrant at $0.07 cents. The proceeds will be used mainly to fund sales and marketing, as well as administrative expenses.
Nov. 6 - Private Placement of up to 16M units issued at $0.05 per Unit for gross proceeds of up to $0.80M. Warrant at a price of $0.05 per Share,
Nov. 9 - Announces Closing of Private Placement. Gestion Maurice Pinsonnault Inc. (“GMP”), is subscribing for 15M units. As a result of the Private Placement, GMP will control over 18.35% of the common shares of DIAGNOS.
Nov. 13 - Addition of a Strategic Partner in the Country of Mexico. This agreement with Axmilab will enlarge the footprint coverage of DIAGNOS’ offering for monitoring diabetic patients through our first partner in that country.
Nov. 21 - Enters into a Shares for Debt Transaction. Issuing 0.90M shares at $0.05 per share, in settlement for interests payable in the amount of $45,000 on outstanding unsecured convertible notes (each a “Note”) totaling $900,000. Two Note holders eligible to receive common shares as part of the shares for debt transaction are considered “related parties” of the Corporation.
Nov. 21 - Closing of Private Placement. 20.6M units issued at $0.05 per unit for gross proceeds of $1,0M for placement of Nov. 6 and 9.
Dec. 4 - Collaboration with ÉTS on Automated detection and grading of Diabetic Retinopathy using Deep Convolutional Neural Networks (CNN). “Identifying patients in early stages of diabetic retinopathy is our main goal because we can treat them efficiently. Our objective is to refer patients at high risk of going blind,” - Dr Hadi Chakor, CMO at Diagnos Inc.
Dec. 12 - Close Private placement - 6.6M shares at $0.05 for gross proceeds of $0.33M - Warrant at $0.06 cents. The proceeds will be used mainly to fund sales and marketing as well as administrative expenses.
Jan. 22 - Extension to the Diabetic Retinopathy Screening at the CHUM until May 2019. Reason: "excellent initial screening results".
Also mentioned is that ADK.V has screened more than 250,000 diabetic patients to date.
Jan. 28 - Welcomes Dr. Jean-Francois Yale to the Board of Directors. Dr. Yale is an endocrinologist, currently professor of medicine at the McGill University Department of Medicine. Dr. Yale chaired the Clinical and Scientific Section of the Canadian Diabetes Association from 1992-1994 as well as the Expert Committee that published the 2001 Clinical Practice Guidelines for the Prevention and Management of Diabetes.
The board of directors has approved a grant of 2.6M stock options to the directors and officers of the Corporation. Stock options vest at 50% per year, commencing with the first anniversary of the grant. The exercise price of these options has been established at $0.05 per share.
In the last six months, ADK.V added two new clients (Optina Diagnostic, 20/20 Now) and extended the CHUM screenings (4.500 patient to date). ADK.V was also successful in restructuring and reducing debts. It enlisted Gestion Maurice Pinsonnault Inc. (“GMP”) which took a 20% ownership in the company. However, the path to de-valuation continues. While November and December 2018 were bad for the TSX Venture, ADK.V has yet to rebound.
A recurring theme has been the issuance of lower and lower stock options in the past 18 months -from $0.13 to $0.075, to recently $0.05 cents. Again, the lack of revenue growth has continued to strained valuation. In the last earnings (Sept 30th), ADK.V was still not close to turning a profit. The holds on the Mexico screening (due to the election) have certainly been a factor but the current valuation is far from Arrowhead's fair value ($0.10 -0.14 cents).
The accomplishment for the period are not aligned with the trend in valuation. ADK.V is still struggling to return to GMP's investment value ($0.05 cents). ADK.V is under performing and the poor communications with the markets is not helping.
While the July 31, 2018 corporate update was an improvement, ADK.V still fairs poorly. The investor presentation is elusive, deals continued to be announced with no monetary value, and updates on projects in multiple countries are lacking from official filings (MD&A). Granted ADK.V is partly in the pharma space, confidentiality applies. However, the way the value proposition is currently communicated is not making the market blink.
Instead, it comes across as if ADK.V intends to be publicly private.
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